I-Cap fund looking at closing

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I-cap partners is looking to close the fund to new investors at the end of October.

Monday, June 30th 2003, 10:45PM

I-cap partners limited (I-Cap) investment manager of New Zealand’s first retail private equity fund has announced that it plans to close the fund to new investors at the end of October.

The Private Equity Investment fund (IEP) is managed by I-Cap and invests in New Zealand based private companies in a variety of industries.

Tony Hannon noted that the values of the underlying investments in the fund were starting to increase following injection of capital and management expertise from the I-Cap team.

Additionally, a number of the investments are potentially approaching the stage where they might be realised in the near future.

"Leaving the fund open indefinitely has the effect of diluting the return to existing investors once the underlying investments begin to make progress," Hannon said yesterday.

"This is because the price of the capital stock may not fully reflect the value of the underlying assets due to their privately held nature. It is for this reason that the intention has always been to close the fund when the danger of dilution exists in order to ensure investors are not disadvantaged."

I-Cap was formed four years ago by Professor David Teece, Nick Lodge and Tony Hannon. They formed I-Cap after realising that New Zealand had a myriad of excellent investment opportunities but many of these companies lacked access to the necessary capital or management expertise to fully realise their potential.

I-Cap’s first fund, IEP, now consists of eight investments totalling $43 million. The firm also manages a mezzanine income fund which pays a variable income return quarterly.

The launch of I-Cap coincided with the emergence in New Zealand of private equity as a distinct asset class for investors due to its potential for high returns and low correlation with other asset classes like shares, bonds and property.

The firm has made several notable investments in New Zealand. It is an investor in Jade Software, an innovative software company, which hopes to list on the New Zealand sharemarket in 2004. Other investments in the fund include stakes in Canterbury , suppliers of rugby apparel to the likes of the Wallabies, and Next Window, an innovative touch-screen technology which has just concluded deals with Vodafone and Telecom and signed an international agreement with Fujitsu.

Hannon noted the significance of the Jade Software holding. "If you want to invest in this remarkable company, the only way to access it is through I-Cap’s IEP."

I-Cap also announced that it is likely to wind up IEP and distribute the proceeds to the investors sometime towards the end of 2008, market conditions and other factors permitting.

The fund will continue to receive new applications until October 31.

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